EUR/GBP Outlook: ING Sees Sterling Weaker Into 2026

That distinction matters. For months, Sterling has been able to lean on expectations that sticky services inflation could keep the BoE biased toward tighter policy. ING says as much as 60 basis points of tightening can still sit in money markets for now, which helps explain why the euro has repeatedly struggled to hold above 0.8605 to 0.8607. But higher rate expectations are only a partial defense. If fiscal credibility weakens, the currency story changes.

The market is already showing signs of that tension. EUR/GBP closed near 0.8592 on Friday and briefly touched 0.8607 before slipping back into range, a pattern that suggests traders are waiting for the UK’s budget arithmetic to do the heavy lifting. ING says the gilt sell-off and the strain it implies for public finances have already begun to matter more than short-term rate support.

For investors, that makes the coming Budget the key catalyst. A credible fiscal package could steady the gilt market and delay the move higher in EUR/GBP. But if the Chancellor’s plans lean on higher taxes, weak growth assumptions or fail to calm longer-term borrowing costs, Sterling could face a larger risk premium from foreign holders. In practical terms, that would be bad news for UK assets that depend on stable foreign inflows and better for euro-based investors hedging UK exposure.

The chart setup reinforces the caution. Repeated failures around 0.8605-0.8607, with support near 0.8583, suggest the pair is consolidating rather than breaking down. A clean move above 0.8610 would be the first sign that the fourth-quarter breakout is arriving early. Below 0.8550, ING’s call would need a rethink.

For long-term investors, the message is less about trading a few pips and more about the direction of policy credibility. If the UK can’t stabilize its financing costs, Sterling’s problem is not just a volatile quarter — it’s a lower-trust currency profile heading into 2026. That makes EUR/GBP worth watching closely, especially for investors with exposure to UK equities, gilts or multinational businesses with sterling earnings.